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Budget 2014 Home Page Budget Economic and Fiscal Update 2014

Tax Policy Changes

As required by section 26R of the Public Finance Act 1989, this section details the changes to forecast tax revenue since the 2013 Budget Update as a result of revenue initiatives. Table 10 gives a full breakdown of the changes, while the supplementary text describes each initiative.

Year ending 30 June
$ millions
2014
Forecast
2015
Forecast
2016
Forecast
2017
Forecast
2018
Forecast
Total
5 years
Unfiled tax returns .. 32 70 70 70 242
Reduced duty-free tobacco concession .. 35 50 50 50 185
Supporting newborns (PAYE effect) .. 1 5 8 8 23
Cashing-out research & development tax losses .. .. (15) (15) (15) (45)
Building materials tariff concession .. (6) (6) (6) (6) (22)
Repeal of cheque duty .. (4) (4) (4) (4) (16)
Blackhole research & development expenditure .. (1) (3) (4) (6) (13)
Other measures 6 .. .. .. .. 6
Total 6 57 98 99 98 359

Revenue initiatives

Unfiled tax returns

Inland Revenue is to be provided with additional funding to focus on:

  • reducing outstanding return volumes, and
  • returns with higher revenue values.

Reduced duty-free tobacco concession

The concession for personal importation of duty-free tobacco is to be reduced with effect from 1 November 2014.

Supporting newborns

A consequential effect of changes to the Paid Parental Leave and Parental Tax Credit schemes is that additional PAYE will be collected.

Cashing-out research and development tax losses

Effective for income years commencing on or after 1 April 2015, in certain circumstances, taxpayers undertaking research and development will have early access to all or part of their tax losses that arise from expenditure on research and development, in the form of a cash receipt, instead of carrying these losses forward.

Building materials tariff concession

A tariff concession scheme for key residential construction materials will be introduced on 1 July 2014 for an initial period of five years.

Repeal of cheque duty

Cheque duty will be abolished with effect from 1 July 2014.

Black-hole research and development expenditure

With effect from the 2015/16 income year, all capitalised costs on depreciable intangible assets will be deductible over time, and in certain circumstances, research and development expenditure towards an unsuccessful asset will be tax deductible.

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